Fixed price vs time and materials: what founders should know
Both pricing models can work, and both can go wrong. A practical look at when each one fits, and the questions to ask before you sign.
By the Anirmo engineering team
When you hire a team to build software, the pricing model shapes behaviour on both sides. It decides who carries the risk of the unknown, how changes are handled, and how much time goes into paperwork instead of product.
Fixed price
With a fixed price, the team commits to delivering an agreed scope for an agreed amount. The risk of underestimating sits with the team, which is why a proper scoping phase matters so much.
It works best when the outcomes and main flows are clear, and when you need budget certainty for a board, an investor update or a grant.
Time and materials
With time and materials, you pay for the hours worked. It is flexible and fits ongoing work, research-heavy features and products that are still finding their shape.
The risk of the unknown sits with you, so it needs trust, transparency and a team that reports progress in working software rather than hours.
Questions to ask before you sign
Whichever model you choose, these questions separate good partners from risky ones:
- 01What happens when we want to change something mid-project?
- 02How often will we see working software, not just status reports?
- 03Who owns the code, designs and accounts, and when do they transfer?
- 04What is explicitly out of scope, in writing?
How we do it
We use fixed price for discovery and for defined builds, and a monthly retainer for ongoing product work. In both cases you see progress on a live staging link every sprint, and changes are discussed openly before they cost anything.